National Insurance contributions for employees and employers set to increase in April 2022
By Rachel Lawler
National Insurance contributions will increase from April 2022, the government has announced today.
The plans will see contributions increased for both employers and employees by 1.25 percentage points – from 12% to 13.5% – in a bid to raise £12 billion for social care and the NHS. Prime minister Boris Johnson said that this means that the cost for supporting these services is split "as fairly as possible" between workers and businesses.
Health and social care levy
From 2023-24, the tax will be renamed the “health and social care levy” on payslips and it will be extended to apply to employees of pension age, who do not currently pay National Insurance contributions.
The government says the plan will “fix the long-term problems of health and social care” that have been “exposed” by the coronavirus pandemic.
Pressure on providers
Neil Leitch, chief executive of the Alliance, commented “The rise in National Insurance contributions announced today will put even greater pressure on early years employers, many of whom were already struggling to afford year-on-year increases in the national minimum and living wages.
"For years now, early years funding rate rises have failed to even come close to covering the growing cost of delivering early years places. Without an urgent and significant increase in sector funding, today's announcement may well be the final straw for those providers who were already on the brink of closure."
The government also announced plans to announce its autumn Budget and Spending Review on 27 October 2021. The Spending Review will set government budgets for the next three years, from 2022-23 to 2024-25.
Find out more
Covid-19 Business advice for early years providers